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Confectionery in Lithuania

Nov 2013|Pages: 65

Price: US$1,900

About this Report

Executive Summary

Chocolate Confectionery

TRENDS

Chocolate confectionery producers are set to experience a good year in 2013, outperforming the whole of packaged food by a large margin. The reason for these good results is not easy to explain: retailers constantly stress that consumers remain frugal and calculate their spending, preparing shopping lists prior to the visit to stores. Some manufacturers believe that consumers simply became tired of saving during the recession and felt like they could afford an occasional treat.

COMPETITIVE LANDSCAPE

Kraft Foods Lietuva AB, a local subsidiary of global behemoth, is set to retain its leading position in 2013, with 37% value share. The player's presence is amongst the longest and its products are universally available in nearly all stores. Furthermore, the company should be viewed as an example for its continuity in brand building. Kraft Foods managed to stay strong even when country's economy was troubled and consumers reined in their spending on impulse goods: price reductions were not frequent so as not to erode brand value. Furthermore, the producer has a clearly identifiable target audience for each brand, with adequate marketing tactics used to reach them. For instance, the countlines brand Manija is made for teenagers; hence the company's activity at youth events and on Facebook.

PROSPECTS

Lithuania's low per-capita consumption of chocolate confectionery leaves producers optimistic about the future. They highlight that the demand for chocolate confectionery is always there - companies even express the view that Lithuanians are very good at distinguishing good products from inferior ones. However, affordability issues loom - chocolate confectionery is still viewed as an occasional luxury, not an everyday treat. While the rebounding economy gives hope to producers, soaring sales are too optimistic.

Gum

TRENDS

As is the case with all impulse and indulgence products, gum sales are set to experience a surge in 2013, growing for the third consecutive year. It should be noted that gum managed to record significant gains despite manufacturers' actions and not because of them: companies remain very passive when it comes to sales promotion of gum. Their inaction may prove beneficial - after all, sales are growing. However, some growth opportunities, which would lead to even faster growth, are likely being missed in 2013.

COMPETITIVE LANDSCAPE

The passivity of gum companies in both 2013 and, to a lesser extent previous years, might be explained by the lack of competition. When it comes to real movers, there are only two players in Lithuania. Wrigley Baltics UAB is predicted to remain in control of sales share in 2013, accounting for a commanding 56%. The company has a long presence in gum, with excellent distribution both in terms of store presence and placement inside outlets. Wrigley continues to adopt the one-brand-for-all approach, using Orbit as an anchor brand, with numerous extensions luring different consumers.

PROSPECTS

Rising spending power of consumers is expected to underpin gum sales going forward. So far, companies have used gum as a completely emotional purchase. Over the review period, new developments will lead to some changes. For instance, features such as mouth-freshening, teeth whitening and decay prevention were added, which should appeal to more rational consumers. Still, as stagnating volume sales will show, the amount of gum consumers is hardly expected to rise.

Sugar Confectionery

TRENDS

The country not only went through the worst recession on record in recent years, but also experienced a massive increase of publications in the media about the do's and don'ts of healthy eating. Apparently, declining incomes served as far more efficient anti-diabetes campaigns than any media initiatives or government efforts. Once the spending power of consumers rebounded, sales started to grow once again, both in volume and value terms.

COMPETITIVE LANDSCAPE

Sugar confectionery remains controlled by domestic players in Lithuania. Naujoji Ruta UAB is set to continue its leadership in 2013 with 29% value share, followed by another local player Vilniaus Pergale UAB with 20%. These companies have a large number of brands and it is this sheer number that helps them dominate the category and resist the pressure from foreign imports.

PROSPECTS

Unfavourable demographic forecasts and declining numbers of youngsters, whose desire for sweets is underpinning sales, do not bode well for sugar confectionery. However, producers are not expecting soaring growth rates and would be fully satisfied with gradual expansion of value sales. This is certainly achievable. One reason to expect sales growth is increasing real wages in the country, which will lead to more generous allowance. There is also room for price improvement, provided companies invest more into brand building.